This energy midstream summary is a very high-level overview of the sector. It, by no means, is a comprehensive version, inclusive of all the detail. However, this version will provide the reader with the foundational elements of the energy midstream sector.

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Energy Midstream Summary
White Paper – October 2019
Executive Summary
This energy midstream summary is a very high-level overview of the sector. It, by no means, is a comprehensive
version, inclusive of all the detail of the sections below, listed in the table of contents. I plan to provide a more
detailed version, up to date as of October 2019, at a later date. However, this version will provide the user with the
foundational elements of the energy midstream sector.
Table of Contents Page
Energy Summary………...……………………………………………………………………………………………... 1
Midstream Value Chain…………………………………………..……………………………………………………. 1
Macro Level Industry Trends………………………………………………………………………………………….. 2
Contract Types………………………………………………………………………………………………………….. 2
Cash Flow Stability…………………………………………………………………………………………….……….. 3
Energy Summary
 Energy - Energy resources are the essential part of human society, as all economic activity requires energy
resources. Petroleum (crude oil and natural gas) accounts for 60% of the world's energy consumption.
 Petroleum Industry - The petroleum industry is divided into three sectors: Upstream, Midstream and
Downstream. The upstream sector involves the exploration and production ofcrude oil, naturalgas and natural
gas liquids. The midstream sector involves the gathering, processing, storage, transportation and marketing
of petroleum. The downstream sector involves the refining and distribution of the processed products.
 Midstream Sector - Capital intensive assets, composed of long-term contracts and predictable cash-flow, link
supply with demand. Toll-road, fee-for-service model.
Midstream Value Chain
Resource Gathering Processing Storage Transportation End Users
Natural Gas &
NGL’s
Gathering
Pipelines
 Field -
Dehydration,
Treating,
Compression
& NGL
Extraction via
JT Plants
(cryogenic
processing)
 Fractionation
Plant – Mixed
NGL’s
Natural Gas and
NGL Salt Cavern
Storage
Transmission
Pipelines
(Interstate &
intrastate)
Petrochemical
Plants and
Liquefied Natural
Gas (LNG)
Facilities

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Macro Level Industry Trends
 Supply - North American Supply at record levels. Grew from 30 Qbtu's in 2007 to 40 Qbtu's by 2011 to 45
Qbtu's by 2014. Expected to grow to 55 Qbtu's by 2020.
 Demand - Mounting supplies and low domestic prices have broadened market demand with 26 LNG (also
propane, butane, refined products and ethane) plants planned for export capabilities, investment in
petrochemical facilities along gulf coast, industrial demand and fertilizer, polymer and ammonia plants and
increased natural gas utilization in power generation due to regulatory pressures.
Contract Types
Natural Gas & Gathering & Processing
 Fee-Based - Gatherer receives a fixed fee per unit of natural gas Gathered, compressed and treated.
 % of Proceeds - Processor receives a % of NGLs and gas as a processing fee; producer keeps their % in-
kind or asks processor to sell NGLs and gas and receives cash.
 % of Liquids - Processor receives a % of NGLs as a processing fee; producer keeps th eir % in-kind or asks
processor to sell NGLs and receives cash.
 Margin Sharing - Both producer and processor share the value difference between NGLs and natural gas.
 Keep Whole - Processor retains extracted NGL's as a processing fee; processor has to purchase and return
to producer gas to replace fuel & shrinkage
Natural Gas Transmission Pipelines
 Fee-Based - Have PPI escalators that index revenues to inflation to offset risks. Pipeline companies are
moving to take-or-pay agreements.
Crude Oil Transmission Pipelines
 Fee-Based - Have PPI escalators that index revenues to inflation to offset risks. Pipeline companies are
moving to take-or-pay agreements.
Resource Gathering Processing Storage Transportation End Users
Crude Oil Gathering
Pipelines, Barges,
Rail Cars and
Tanker Trucks
Field -
Compression,
Separation and
Treating
Storage &
Blending
Terminals,
Pipeline Injection
Stations and
Central Delivery
Points
Transmission
Pipelines
(Interstate &
Intrastate),
Barges, Rail Car
and Tanker
Trucks
Refineries
Water Gathering
Pipelines and
Trucks
Treating Holding Tanks
and Disposal
Wells
N/A N/A
Refined Products Transmission
Pipelines
Refineries Storage Tanks Refined Product
Pipelines
Gasoline, Diesel &
Jet Fuel
Petrochemicals Transmission
Pipelines
Refineries Storage Tanks Petrochemical
Pipelines
Petrochemical
Plants

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Cash Flow Stability
Stability Business Type Contract Length Revenue Type Price Exposure Customer Type
Very High
Natural Gas
Pipelines
10 + Yrs FixedFee /Take-
or-Pay
Little Gas Distribution,
Utilities,
Producers,
Marketers
Crude Oil
Pipelines
5-10 Yrs FixedFee /
Volume
Little Refiners,
Producers,
Financials
Natural Gas
Storage
3-5 Yrs FixedFee /
Volume
Little (For
Curve/Contango)
Utilities,
Marketers,
Financials
RefinedProd
Pipelines
1-5 Yrs FixedFee /
Volume
Little Refiners,
Marketers
NGL Pipelines 1-5 Yrs FixedFee /
Volume
Little Petrochemical
Plants,Producers
Gathering&
Processing
1 Yr - LOL FixedFee /POP/
POL / KW
Little Producers
Fractionation 1-3 Yrs Fee-based/Frac
or Pay
Little Producers
Rail 1-5 Yrs Fee-based/
Distance
Little Refiners,
Producers
Storage
Terminals
1-3 Yrs Volume /
AncillaryServices
Little (Contango) Refiners,
Financials
Very Low
Marine Shipping 1-3 Yrs Fee-based/
CharterRates
Little Refiners,
Petrochemical,
Integrated,
Marketers